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Personal Finance Tip:Earn interest;
don't pay it. Americans have gotten used to living with
debt,
but the faster you can pay it down, the sooner the bank starts
paying you instead of the other way around.

Harvard Law professor Elizabeth Warren, an expert on the credit card industry, was the main guest, however, and she had a lot of great things to say. (I admire Warren and her work, including the personal finance book, All Your Worth: The Ultimate Lifetime Money Plan.) After hearing my story, she made an interesting distinction:

There are three kinds of people who carry credit card debt. One is like J.D. He makes a lot of money, but he just spends more than he makes, and I understand that. But there are two other groups.

There are a lot of people who spend more than they make, but the difference is somewhere else on the scale. These are people who really can’t make it to the end of the month on $40,000 a year. They can’t support the kids, they can’t pay their medical bills, and those are a lot of people who are carrying credit card debt…Credit card debt — a lot of it — is about medical debt, about putting groceries on the table.

And there’s kind of a group in between those two. Those are the people who when they were young and stupid, were young and stupid. They…ran up some credit card debt…said, “Boy, I’m in trouble here.” But the problem now becomes the card itself.

I’m not convinced that Americans are in credit card trouble because they’ve turned to plastic to make it to the end of the month. I believe that most Americans get into debt because of consumer spending and bad habits. If you practice smart personal finance from the start, you minimize the chances that any one disaster can leave you in financial ruin.

I suspect — though I don’t have numbers to prove this — that unexpected emergencies are often simply the straw the breaks the camel’s back, but that the camel was already bearing the a heavy load of consumerism to begin with.

A recent New York Times article about Americans in debt profiled Diane McLeod, who fueled her lifestyle with credit cards and other debt. This worked fine until “back-to-back medical emergencies helped push her over the edge”. From my experience, McLeod’s story is more typical than that of a family turning to credit as a last resort.

But maybe I’m wrong.

If you currently carry credit card debt (or have done so in the past), what’s your story? What got you started? How did the debt get out of control? What’s your plan for paying it off?

We had always been smart with our card, using it to get the reward points and paying it off every month. Then, a series of expenses (home and car repair, and medical stuff) came up that drained our too-small emergency account. So, we suddenly couldn’t pay off the card. But I think it was about poor planning, we knew we should have had more $ in the bank. We spent more than we should have every month, instead of saving it. It’s just still amazes me how fast we went from “those people who are good with cards” to “those people who are bad with cards” – it was like two months!

I started out in the young and stupid category when I went nuts with my first credit card in college. A few years down the road that transitioned into the second, struggling to make ends meet category. It’s self-perpetuating. You spend unthinkingly, and then when you’ve learned your lesson and understand the consequences, said consequences make it hard just to get by from paycheck to paycheck. We’ve gotten rid of most of it, though, and we’re close to paying off our last credit card, just in time to take on a mortgage.

I think Joe at comment 44 makes some good points. In today’s NYTimes there are two articles with points to make on this. One (which quotes ms Warren) talks about how the banks went from offering mortgages as “real” debt to “mortgage equity” as money growing on trees…
the other points out that recent inflation in food and energy especially have cut the average wage by 3% or more. Very soon more and more people will be in that category of simply not earning enough to support even the basics. And while I think that maybe a lot of us could redefine what the “basics” are, I also know that a lot of people are already at the edge and have cut everything they can…

I basically married into debt. Don’t get me wrong, I used credit cards heavily, but always paid them off in full or took advantage of no interest offers. I never had anything that took more than a few months to pay off (no house, car, etc.).

My husband on the other hand had a whole other situation. A few years before we started dating he had purchased a home, which he shared with a roommate. About a year later, the roommate moved out to buy his own home shortly before my husband was laid off from work. It was during this time that we started dating (had known each other for many years prior). So here he was making less money and having all the bills. He worked odd jobs and began working with a friend of his in an IT consultancy startup. He was making just enough money to cover household bills, but relied on the credit card for all other expenses (gas, groceries, etc.). He eventually got another roommate to help out, but it was too little too late.

For two years he worked in the startup on an hourly wage, but often wouldn’t work more than 20 chargeable hours. He was vastly under-employed, but believed in the company and liked having a somewhat flexible schedule so he kept with it. Around the time that I moved in, the company was doing well enough that he was put on a weekly salary, which helped greatly.

Unfortunately the damage was already done though. His credit card company jacked the interest rate (with no reason) and he moved it to a HELOC. That plus another credit card landed him with $30,000 of debt at the time of our marriage (not including the wedding – which was paid off by us and our parents just months after the wedding).

After the wedding, I convinced my husband to let me take over all the finances. I found that he never really even paid attention to what he was charging and never paid off a balance. By the end of the year, we should have the debt trimmed down to about $23k (it would be more, but he had a few emergencies that made the payments smaller).

So, yes, I married into it. I love my DH and I accepted this baggage along with him. Together we’ll get through it.

Started out spending on stuff in college -dinners and travel and cd’s and books – more than I could afford. Then for a few years I made some progress, putting a dent in it.

Then, making plenty of money and just spending more than I make, digging the hole even bigger. I am slowly trying to get a grip on it, but it is definitely two steps forward, one step back. It took months of reading personal finance advice before I finally stopped procrastinating and added up my total.

I was Y&S and on top of that invested in a business I shouldn’t have. Then after I had accumulated about $18,000 in credit card debt I had a complete mental break down and ended up having to be saved (for real) by my parents and the wonderful man I married. I’m much better now, out of credit card debt, living as a cash family. The husband and own our house (we paid in cash) but have a small car loan that I hope to pay off by the middle of ’09. However, we have no emergency fund so I am starting to build that now and of course in order to do so we live very frugerly.

It’s fine, I’ve learned my lesson and am getting treatment for both early menopause (one of the reason for the breakdown) and the psycological issues.

We are now doing much, much better but I worry about all the others who are in the same position in the US.

My parents got married very young and had 3 kids nearly right away. (This may not have been planned.)

They were doing OK, and my Dad decided to go to school and get an engineering degree (he was working as a draftsman at the time). Things got a little tighter. He started having health problems (seizures, the first one he had was when we were playing before bed; that is a scary thing when you’re 5 years old!).

My mom worked, but there was never enough money and they did have to use credit cards to put food on the table. Not always (luckily, we thought it was fun to have peanut butter and jelly for dinner!), and unfortunately, this was before getting credit was easy.

My parents didn’t spend a lot on anything. Our clothes and new toys almost always came from our grandparents and other relatives. Our parents simply couldn’t afford it.

My dad finally finished his degree, and then my mom went back to school as well. I’m happy to report that now they’re doing great and no longer have to use credit to make ends meet.

Warren’s first scenario sounds a lot like my parents, actually. They lived a very frugal lifestyle and just couldn’t make it on their salaries. I believe it’s more common than we think.

Seriously; this describes my best friend to a T. She has what would be considered a good job in the corporate world, but her company is on the small side, so she only makes around $32K a year and after paying for insurance and transportation her take home pay is even lower. She has a small apartment, which is not too crazily priced considering our city, and she has a roomate. She cooks her meals at home; she rarely eats out. She doesn’t have expensive hobbies. She almost never buys anything for herself.

Yet between student loans (which are relatively small because she chose to go to a local school), the cost of living, and her medical expenses, she struggles to make ends meet, and saving anything? That’s pretty much a joke.

There are a lot of people spending themselves into the hole for sure, but there are just as many, if not more, people who would be in the hole regardless.

I was living beyond my means, then I lost my job, went back to school, and didn’t earn as much money right out of college as I thought it would. From the time I lost my job, it’s taken six years to get back on track. I became debt-free in May, but really, I carried some credit card debt since 1995, but only a few hundred dollars, plus a car loan.

Series of reasons, decisions and stupidity put me in debt. When I was young I would spend money to show off friends and impress younger cousins, all of course on credit cards. When I got married, I payed for wedding with most of my savings and my credit card. Two weeks after my wedding I lost my job in the middle of a recession, used credit cards again to pay for expenses. It took me a few months to get a decent job. Three years later, still in CC debts we bought a house with 10% down payment. Then wen went on a spending spree on bedroom furniture, living room furniture, dining room furniture, guest room furniture and whole lot of other things, all off course on credit cards. Part of the reason was overconfidence in our own ability to pay for all of this. Then one day when i was doing the finances to my horror found out that for the last several months we were spending more than we earned. All the consumer credit & CC payments became a significant portion of our expenses. Soon we buckled up, cut out spendings, stopped using credit cards, prayed hard and during the course of next 3 years we payed of credit cards, consumer credit, student loans,car loans and personal loans. Today we are debt free with the exception of mortgage and we have just started to take baby steps towards investing towards future.

I’m a SAHM, my husband works construction but we are working a plan. We have an emergancy fund, started saving for retirement, health insurance, and are currently building a house for cash.

My sister has a similiar life except instead of an emergancy fund and a house fund she has nicer cloths and nails. Instead of saving for a house she jumped into one that takes just under half of their income each month.

She will soon recieve a $10,000 inheritance that she already has spent. I tried to tell her to keep at least $3000 in an emergancy fund but she responded, “yea, I know, everyone has ideas about what we should do with the money”

I’m tired of hearing her complain about how broke they are and living paycheck to paycheck and have to put back to school stuff on the credit card (along with the pool deck from last summer and did I mention the media room with built in sound system?)

I started carrying credit card debt when my husband and I started dating. We are both independent and didn’t rely on our parents for money when we were in college. I had ZERO credit card debt. My husband had so many credit cards that he couldn’t even count them on both of his hands. He used credit cards to fund everything while he was away in college- books, food, school supplies, gas…everything! We got married and had our son early in the marriage. We paid for our wedding by credit cards but we just had a very small wedding. My mother helped us consolidate our cc debt into one loan and we paid it off. Then emergencies came up, we moved states, and we racked up more cc debt. Right now, our debt is manageable. We are strictly cash only and do not touch our ccs as we pay them off. My husband had over 10 ccs and now we’re down to three but never use any of them. It’s been a long road and we’ve come really far but we have a ways to go.

I personally carry only about $3,000 of credit car debt, which is due to car repairs and electronics (which is important to us). This debt will actually be paid off during the next year and we really only have it because at the moment we’re living on one income while my husband is in school. However, I would like to say that growing up, if we didn’t go into debt, we went without. Circumstances may be of your own making sometimes, but sometimes you just can’t get a job that makes enough to provide. It took us a long time to get to a good financial place.

I never really had a large amount of credit card debt, largely due to having low limits – $1000, $1500 and $2000 respectively on the three cards I had. I did max all three due to a car accident I didn’t have proper insurance or an emergency fund to cover, but I was able to pay them off fairly quickly.

Most of my debt was student loans, almost $40,000, because my parents didn’t save for college for me, and I didn’t have a dime saved either. That took almost 10 years to pay off.

The rest of my debt was in car loans. I had borrowed a for a car shortly after college, about $13,000. I paid that off within 4 years (5 yr note). Then I did something stupid and borrowed another $18,000 for a brand new car. That took 3 years to pay off.

My cc debt came from traveling to friends’ weddings. Right after college, I moved across the country from all my best girlfriends. The move was something I needed to do for my career, but I made a pact with myself that I wouldn’t miss out on these weddings for any reason. I put the plane tickets, hotel rooms, bridesmaid dresses, gifts, bachelorette parties, etc. all on my credit card, but even at its peak the balance was still less than $10k.

Fortunately, I work in a field that pays annual bonuses, so my credit card was always paid in full each March when that bonus check came. Now I’ve worked out a plan to set aside a certain amount each month into a savings account, and I use that account to pay for charges on my card. Sometimes the charges are too big for that (airfare is so expensive these days), but I feel safer having that little cushion.

There are definitely people who aren’t wasting their money. They just can’t make it on $40K. One of the most aggravating things about reading PF blogs is this sort of post, which completely ignores class realities in modern American society.

I am a SAHM w/ 3 kids and my husband doesn’t earn enough even w/ frugal living & careful spending-I have been charging gas, groceries, dental work etc for 3+ years now & only making minimum payments. The youngest is finally in school & I can now STOP CHARGING & start PAYING IT OFF! It is $25k in debt but I am ready to tackle it-Looking at my kids I’m not sorry for the choices I have made-I am glad to have only worked part-time and am grateful my husband has kept us afloat so I could be here with them. Now I am BUCKLING DOWN and hope to post my own success story within the next 36 months-keep the encouragement coming…

I think that so many of the postings above are indicative of why Americans are in debt — we consume too much, define “wants” as “needs” and feel entitled to things that aren’t entitlements. People above defined “necessary” or “emergency” purchases to include tickets to Norway due to a parent’s illness, tickets to funerals, tickets and other costs for “mandatory” weddings, cable, cell phones, etc. We need to fundamentally come to the conclusion that if you don’t have the money, you can’t have it — with the exception of serious “needs” like healthcare. I know that funerals and weddings are important, but if you don’t have the money, you can’t go. Period. Just a few decades ago, almost no one other than the extremely rich flew around the world and the US for such things. And though cable, cell phones, etc have become expected conveniences, they still are not entitlements. Lots of Americans do just fine without them, and not having them is better than debt.

The first part of the debt was a bit of stupidity and a bit of survival. I was working two jobs and going to school full time (more than full time, actually- I was overloaded on the credit hours so I could get out in 4 years with a double major) and not making enough to buy groceries or pay for my prescriptions. But, I was also buying clothes and things that were less than necessary. Textbooks and school stuff went on there, too.

The second part (the part I’m working on now) has been largely medical bills, moving expenses and car repairs with a couple of slip-ups (but much fewer than before). I do have a plan to pay it off, but it is going to take a very long time because I make very little money because I am an AmeriCorps VISTA. When I’m done with my service, I will get a hopefully considerably better paying job (just about any job would be considerably better paying. I don’t even make minimum wage right now) and will be able to really attack and pay off the debt very quickly.

There is tremendous continual pressure on the American consumer to go into debt at a very early age and to stay in debt for the remainder of their lives or at least as long as possible. This is a message delivered to all aspects of our lifestyles from college loans to mortgage burdens to cars to buying on credit to extending loans based on assets (equity or 2nd mortgage).

It is a perceived net of security to ward off other advancing pressures such as inflation, insurance, wage freezes, tax increases and unforseen calamaties. Yet in fact it quickly becomes the trap itself since it (credit) is manipulated so carefully by the banks in the form of credit scores, interest rates and other fees.

With all of this corralling applied to generation after generation in our country, I’m not so sure debt woes are the result of bad choices people have made. Instead it appears they are the result of poor education, awareness and lack of available comprehensive tools in matters of personal finance and economics.

What middle school or high school emphasizes these issues to children enrolled prior to them embarking on phase 1 of the debt cycle upon graduation? If schools are not teaching this to one generation, how will those students be prepared to teach it to their children? It is a beautiful scenario for the banks…

I built up a bit of debt when I was young and stupid, buying things I couldn’t afford.

After I got married, my wife had no concept of budgets or constrained spending – she had never had her own job, and never even really had an allowance, her parents would just buy what she needed if they could afford it. (not in a spoiling manner, they just bought it instead of giving her money to manage and spend.)

Married, and with kids coming along, we’d spend the paycheck on nothing in particular, and then have not quite enough left for bills, so I’d take a cash advance to make ends meet. We had no savings, so any emergency was charged on credit. Then for the last childbirth she wanted a doula instead of a hospital, but insurance doesn’t cover it, so we charged the $4000 expense, and topped out near $30,000 in debt.

Thanks to timely re-financing, it’s all at a low fixed rate until pay-off, we are committed to never charging anything ever again, have it paid down to $20,000, and thanks to some stock options will have it paid off this month.

So I’d put us in that middle group – we weren’t proto-consumers, we didn’t buy the latest gadgets or have a car newer than 10 years old (although there was a motorcycle), it was just a bunch of mundane consumables and expenses… just too many of them for our paycheck.

I didn’t even have a credit card in college (during the late 80s). It wasn’t until after graduation, when I entered the corporate world, that I began to have credit card debt, although it was relatively small. When I left my ex-husband, I discovered $2,400 in hidden credit card debt and because he was irresponsible, I got saddled with it. It took me two years to clean that up. Then I went another 11 years without any cc debt.

However, my new hubby and I recently purchased a real fixer upper on several acres. We didn’t feel comfortable bottoming out our savings, so we decided to put the appliances and some of the necessary supplies for improvements on the cc. We figured it wouldn’t be too much and we could pay it off in a year or so. BOY WE’RE WE WRONG!!! The rehab costs have been much higher than expected, and now our cc debt is too! I’ve got most on 2 different 0% cards, but the rest is on a 8.9% card.

I *HATE* credit card debt!! But we don’t feel comfortable bottoming out our cash to pay it off just yet. It will take approx 3-4 years to clean up the mess, but we just have to live with it until then.

This episode has taught me an important lesson about myself – emotionally I don’t do well with cc debt. Once our cards are paid off (we owe $17k still), we will *NEVER* carry cc debt again! We’ve agreed that moving forward, if we can’t pay cash, we can’t afford it.

Mostly it was after moving cross-country and having to live off my cards when I couldn’t seem to find a job in the new location for a few months. My industry was undergoing a sea change at the time (dotcom bust, post-9/11 instability, to name a few things) and I wasn’t prepared for the new job-finding paradigm.

Thanks in part to balance transfer shuffling, I’m on my way to paying off that debt now.

Even though it wasn’t much ($2000 approx) how I got into debt was by only having one bank account and no high interest online accounts. All money coming in and money going out was out of one account. After a week or 2, I’d go into the negative and use CC

Since setting aside EF & monthly expenses into the 2 high Int accounts, paying off debt is easy. Anything left over after setting money aside into the other accounts (including money for debt) went into the $2000 CC debt.

I did a number of things right:
I paid a percentage of my college costs as I went, and owed my parents 10k when I finished. Didn’t have a car for years and then bought used for cash.

Aside from the school debt, which I paid off in 5 or 7 years, my debt was never bad, but I carried about 3k on credit cards for YEARS – even if I had the same amount in the bank!

I paid it off in 2000 (right before getting laid off) and was okay for a few years, but then I went to grad school (hello 17k in debt), bought a late-model used car (6k in loans) and got a little loose with my credit card when I relocated for work (6k). Wow, that’s 29k in debt, though because they were acquired at staggered times, my highest total debt load was probably “only” 22k, in 2004 or so, and I’ve been paying it down steadily.

geez, I’ve never spelled it out like that before.

I always maintained an emergency fund, and am down to owing $7392.11, with full payoff by next August on my radar screen.

so how did it happen? grad school + car being totaled in an accident + moving to a new place and furnishing an apartment + some frivolous spending. Just living life, in other words, without paying close attention to the details.

Pure, no-holds-barred consumerism. I am WEAK, here me SHOP! There is no reason why I can’t live happily on my monthly take-home. But I just love to buy things. I can sit at my computer planning to pay everything off and really commit to the idea of cutting back on the shopping – then I walk into Target to buy a necessity like a toothbrush, and I walk out with $100 worth of “stuff”. It’s like temporary amnesia when it comes to my financial goals. It’s ridiculous, and one of these days I will stop it all. But I haven’t quite learned my lesson yet.

We’re in our mid-40s with two kids, ages 7 and 4 and never carried credit card debt. Two bouts of unemployment for DH, back to back–out of work for 7 months, then held the next job for 20 months, then out of work a full year–sent us into debt. Thanks, corporate America. We used up unemployment, our savings, etc. In the midst of bout #2, my Dad died and he lived on the opposite coast–lots of expensive last minute travel, etc. Add in a bunch of dental work and a car emergency and that’s how you make ends meet.

I believe J.D. is right on the nose when he says that an emergency is often the last straw on an already crippled camel. Emergencies will always happen! It’s gonna rain so you better have a rainy day fund. I know the cost of everything has increased drastically, and salaries have certainly not kept up. But people can still make it in this country and build wealth if they just live on a plan. The savings rate of the average American is now lower than it was during the great depression! Maybe the economy isn’t great today, but it’s certainly better than it was during the great depression. Also, we have more mothers in the workplace today than we did back then. So things were worse economically and families only lived on one income, and yet they still saved more (and gave more to their churches and such) than we do today. Say no to the latte and yes to the savings account! The WSJ says 70% of people live from paycheck to paycheck! How said is that?! People refuse to say “no” to themselves. If you can’t pay cash for it (except a home) YOU CANNOT AFFORD IT!! Credit Cards suck.

@42 DanL:
“I first wrote off my debt to being “young & stupid”. However, I soon realized that I DID realize what I was doing, so that wouldn’t necessarily qualify as “stupid”, but I chose not to address it right away.”

There is a difference between ignorance and stupidity. Doing something that you are fully aware is a bad idea is the latter.

Our credit debt divides into two types–spending I regret and spending I don’t.

The latter is three large items. My wife and I did not want to postpone marriage until we could afford the wedding. Ours was a very small, simple affair, but still cost a few thousand. Our credit card interest was lower than our car loan, so we switched that to the card. Then my wife had an opportunity to do a summer study abroad at Cambridge. I don’t really regret that debt and I try to keep that in mind when I begin to despair about our debt.

But that debt indirectly contributed to two problems. Firstly, we did force ourselves to develop the discipline it takes to save–a discipline that would have eliminated at least one if not two of those big purchases. The second problem is that once I begin putting something “necessary” on the card, well, a little more here and there will not make such a big difference. The card first becomes a substitute for saving large amounts and then for saving small amounts.

In my case, the foundation of my debt was Y&S spending. I’d bought things I didn’t really need, took trips I really couldn’t afford, etc. etc. But even with that mindset, the debt was always at a manageable level–usually around $7000, which I could have paid off at the time if I’d put my mind to it.

Then, in 2001, I was unemployed for 4 months. When I got a new job, it involved a major move, plus it paid much less than I’d previously been earning. Did I mention that I’d also had a baby that year? All I can say is that for about 3 years, I was living in a sort of financial fog. My debt mushroomed and I just couldn’t get a handle on why I was spending so much money.

In some ways, I’d almost say that the debt was a sort of depression that I was going through. I’ve made huge progress over the past few years, and I’m in a much better place now, both emotionally and financially.

My husband and I had only $300 in credit combined when we met…now we’re over $30,000 in debt!! A last min move to Colorado, lack of a job for 2 months, splurging on the high end washer/dryer…basicly stupid mistakes have been the cause of our debt. We’re on the road to recovery though and your site is amazing! Keep it coming!

The most credit card debt my husband and I ever had was following grad school. We used them to “get by” and “fill the gaps” where student loans were lacking. In retrospect, we did more consuming during that time than now and probably could have avoided the credit card debt as well as reduced our student loans if we had lived a bit tighter. After eliminating the credit card debt, my husband and I use them for necessary on-line purchases only i.e. savings on dog meds or other items. In my experience, whether or not you use your CC debt to fill the gaps depends greatly on where you fall on the economic ladder combined with how influenced you are by consumerism and keeping up with the Jones’. I felt more inclined to portray an image of wealth and comfort while I was in grad school than I do now. Maybe it has something to do with maturity, regardless; I get more furrowed brows now than I ever did when people realize this landscape architect and attorney live in a lower middle class neighborhood and drive 8 and 11 year old vehicles. We need to be aware of the expectations we unwittingly force on others.

My credit card debt was all obtained buying necessary things I could not do without when I was unemployed and unable to work due to a serious illness. I paid my car insurance for about a year on my credit card. Considering I was on food stamps, I was poor enough for one to believe I was not making ends meet. This is not an issue of over spending. I recall that I did buy myself some $15.00 pearl earrings at a garage sale once while I was struggling, my one splurge for the season, and my mom scolded me for it. I was so sad, I was so dependent on her that she could scrutinize my every cent.

I vowed to sever that money reliance relationship with her, she was rather abusive to me about the tiniest things I did and she felt she could be because I was getting car insurance and phone service from her. I took the leap, and got into credit card debt. I do believe those were both necessary expenses at the time. I do not support driving without car insurance.

However, I have never been in more than a few thousand in credit card debt. I got out of poverty relatively fast and used my credit card to get me out of poverty. I used my car to get a new job and to get to doctors appointments to cure my health problems.

I finished my gradschool, brought a used car and took upon a $37K job in 2004 while carrying $26K in debt. This included some of my tuition fees. All my 2 years in gradschool and probably 2 years after I started working, I had no idea where the money was going. Young and Dumb – spent lot of money on bars, clubs, eat outs, travel etc. My boss found out that I was living paycheck to paycheck and he sat me down and explained the consolidation. I started consolidating CC debt and started paying lowest balance first.

Fast forward to 2008: Took upon a good job which pays more. I am married, my wife doesn’t work yet. I spent good deal of money in going back to my home country (India) to get married. I own 2 decent cars. I paid off all my debt ! Only debt I have right now is $10K – that also becuase I borrowed money on 0% APR to invest in off-shore real estate. I have about $4K in emergency savings and $3K for our next trip back home. All our vacation time and money are spent in taking this trip once every 2 years. I am renting an apartment now, not sure about the job, so haven’t bought a house yet. I am glad that I learned rather quickly ( I am 29 now) and looking forward for a debt-free life.

The first time I carried a cc balance was because I did not make “enough.” I took a new job with a 50% paycut. Although I lived beneath my mean in my previous job, it was not on 50% of my pay. In that first year, it was difficult to learn to live on my new income, so I accumulated about $3000 in cc debt. I took a couple of part-time jobs (both seasonal) and dipped into my savings to pay that off. I was cc debt-free for over 3 years.

I am currently carrying a balance of approximately $6000 for vet bills (there was no question about paying for this treatment). I still work a part-time seasonal job, and plan to use that money to pay a significant portion of the bill. I am in the process of reevaluating and tightening up my budget (which was already being squeezed with rising prices). If necessary, I will stop my IRA contributions for a short period of time to pay off the debt (ala Dave Ramsey).

My debt started with Y&S spending. My parents got me a credit card when I was in high school; since they co-signed & limits were based on their credit history, I had over $10k in credit available before I was 18. Went to college, spent $ freely on stuff & trips, so even though I worked (sometimes 2 jobs) throughout the 4 years I still ended up with $5-7k in CC debt by my early 20s.

When I was offered partial reimbursement of grad school tuition by my employer, I used the first check to pay off the credit cards & financed the remainder of tuition on loans. Thus, my $22k current loan balance technically includes some CC debt.

Later, I married my husband who had no CC debt but did have a student loan from undergrad. Current balance is about $11k.

We both have cars; prior to buying my new car late last year, both cars were loan-free. Current auto loan balance is $5k, will be paid off by Feb.

We do the majority of our spending on 1 credit card (for cash back rewards), which I pay off multiple times monthly & we don’t carry a balance. The student loans were obviously critical to our career paths; the auto loan still bugs me but we’re snowballing it to be gone shortly.

I still have a car payment (until Nov) and student loans, but I paid off $18k in credit card debt about 3 years ago. Most of the credit card debt was from a 6-month period between my graduation and getting a job. Graduation expenses, job hunting expenses, COBRA payments, moving expenses, security deposit and first month’s rent, and furnishing my apartment (almost none of my thrift-store funiture was worth moving cross-country, and I did splurge and buy new) all went on low-interest credit cards. I did live with my parents while job hunting to keep costs down. It took about a year and a half to pay it all off, but I lived like I was still a grad student and did it (I made $15K a year while I was in grad school). That meant no cable, dial-up internet, rarely eating out, brand new clothes only for work and only on sale, vacations only to visit family 2x/year, using the library, and many of the other frugal measures that JD writes about. I’ve loosened up on spending since then, but I found that I’m so used to living frugally, the habits are ingrained.

I was in the “young and stupid” crowd. At the university bookstore they’d throw in the Citi credit card apps. And the rest is history. I had no knowledge of credit cards or personal finance/budgeting, so I was off to a small start. Small amounts that eventually added up.

I finally/completely got rid of the debt two years ago. After almost ten years of revolving credit card debt. A portion of that was helping family out though, and I hit hard on budgeting once I had a job that paid better. eBay was also/always a helpful aide in combating the debt. Now I only have a consolidated school loan to pay off!

My own credit card debt was trying to make it through college. I had to buy books and other necessities (real ones, not the cute jeans I saw on sale), and the money from summer jobs just didn’t cut it. I didn’t have any extra support from my family – because my mom is one of those people who can’t make it month to month on what she earns. Granted, I have many young siblings, and it’s hard for her to get a better paying job when she never went to college. (My dad was also terrible at these things, passed away a few years ago, and there is a new man in the picture but he is not much help either). I do think that JD is a little bit right though – I really think that she could do a lot better, if not get into the black, if only she would accept some financial education and make better decisions. But ‘the kids’ can’t possibly give advice to ‘the parents’ in our family, so I just try to help out my siblings when I can and leave it at that. It makes me worried about what will happen when she is older though and can’t work anymore.
Luckily my college credit card debt is long gone now. I even refused to buy books spring semester of my senior year (waiting for them on hold at the library, my grades did go down a bit) when I freaked out about how much money $3000 was and how I would never be able to pay it off.

I got into debt just like you said: general stupidity topped with unexpected emergencies (plus student loans). I don’t really buy the whole victim role when it comes to credit card debt either. I mean, is it too easy to get a credit card? Yes. Do companies take advantage of youth and ignorance? Yes. But ultimately, getting the card and using the card is a choice. And people usually resort to it not because it’s their only option, but because it’s their most convenient option.

I work in bankruptcy, and I review a lot of petitions, the vast majority of folks going into bankruptcy are facing huge medical bills, drive old cars, and are poor enough to qualify for earn-income-credit on their taxes.

Life is hard out there. Those of you with professional careers that overspent and are tightening the belt to fund retirement are the lucky ones in many ways.

A combination of factors, but I think I can sum it up as Hubris (maybe gross negligence). You asked, so here goes:

Factor 1, I picked up the debt habit (like so many others) in college, and particularly law school. However, at that point I was careful to keep my debt within reach, monitored my cc spending carefully, and was always good with my payments. I now realize that the downfall here was not the debt level so much as the habit of relying on cards to bridge the financial gaps.

Factor 2, I married someone with long history of bad credit AND somehow failed to appreciate that that might be a hint of her future approach to money. There is a lot more to this part, but as this isn’t “Get Mentally Healthy Slowly”, I’ll stop there.

Factor 3, After graduating, we earned a nice income and we lived/worked in a relatively inexpensive place. However, I also got swamped with work and essentially abdicated my responsibility regarding my (and my family’s) finances. This left the responsibility for day to day financial affairs to my wife (the one in Factor 2). Given my professional demands, I was (willfully) ignorant enough to believe that I didn’t need to keep up with things. My wife on the other hand was happy for the trust. However, she was also embarrassed at her own inability to manage the finances effectively and began engaging in the same dysfunctional behaviors that lead to her prior credit issues. To compound matters, her own poor credit had limited her ability to get into much personal debt, but she now had access to my personal information and stellar credit history, which allowed her to secure credit increases based on my credit score and additional lines of credit without my permission/knowledge. By the time I discovered this (almost 1 1/2 year later), my total cc debt had become gigantic (even though I’ve confronted the situation personally and am well on my way to digging my way out, I’m still embarrassed to say how large).

At the time, it was easy for me to believe everything was OK because I made very good money and my day to day expenses didn’t seem that high (in hindsight I now realize I was unrealistic about expenses like eating out and buying toys). In looking back, I had (or could have had) visibility to all of this. Regular checking of my credit report (I do this now), or even a more critical analysis of my income and expense would have prevented most of this. This has been a valuable, if expensive lesson for me. I’ll never trust something as important as my financial future to anyone again.

We started out simply enough. My husband and I were both in school when we got married. He quit to support me through. I didn’t have time for a job at all. He never told me “no”. Anything I wanted he gave me. He also didn’t share the financial picture with me at all. I kept my CC debt almost non-existent, but when I graduated, he had about $5k in CC debt. Then we moved and bought a “fixer-up” house. It wasn’t terrible, but it needed work. That’s when I really got into debt. I quickly ran up $7k on my own, most of it for the house but a portion of it was not making ends meet. By the time we woke up (mostly thanks to GRS and Simple Dollar), we had $15k in CC debt. We are down to $4k total, but it is slow with him in school full-time. I definitely look forward to him graduating and getting a good job so that we can knock out the rest of our debt. We have learned so much being in this position that I really hope and pray that we don’t ever let the CC get out of control again.

Yes, life is hard. Ask the over half a million people who were laid off in the first half of 2008 alone. And they aren’t going to be finding jobs that fast, either. The government has extended the duration of unemployment benefits because it is hard to get another job.

Combination of young & dumb & starting grad school when I was only making $6 an hour. I got a pay jump when I started school, but, I hadn’t been making enough to really save prior to that. However, my job was willing to reimburse 75% of school costs. So… paid with the credit card, tried to pay it down before the end of the semester & never quite succeeded. Slowly the credit card debt built, and, I finished school and didn’t have a job. I had to prioritize car payments and gasoline to *look* for jobs over using my cushion to pay off the debt.

Eventually I got two jobs and started paying things down. And then my fiance finished it off for me when my job prospects looked iffy again. (At that point, I was going to be paying $350 a month for health insurance.)

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